The Stock Market

What is Stock? Stock represents ownership in a company or rather a publicly traded corporation. Buying stock is an investment in the company. This is how companies raise $. The stock market is a medium for the trading of stocks. If a firm sells 10,000 shares of stock and you purchase 1,000 of them, you own 10% of the firm. Video Definition

Why buy or sell stock? Corporations sell stock to raise $ Limited Liability (only lose investment not house etc.) Individuals buy and sell stock to make $ As a stockholder, you share in a corporation’s profits. The Stock Market operates in a Market Economy, therefore stock value is determined by supply and demand. Like baseball cards, you don’t just buy cards, you invest. Businesses must undergo an initial public offering (IPO), to go “public” and can be expensive. Companies also sell bonds to raise money

What’s in it for you? Capital Gains: An increase in the value of a capital asset (investment or real estate) that gives it a higher worth than the purchase price. The gain is not realized until the asset is sold. Dividends: A distribution of a portion of a company's earnings, decided by the board of directors, to a class of its shareholders. Dividends may be in the form of cash, stock or property. Most secure and stable companies offer dividends to their stockholders. Dividends are received quarterly.

Types of Stock Common: (most common type) a security that represents ownership in a corporation. Holders of common stock exercise control by electing a board of directors and voting on corporate policy. Common stockholders are on the bottom of the priority ladder for ownership structure. In the event of liquidation, common shareholders have rights to a company's assets only after bondholders, preferred shareholders and other debt holders have been paid in full. Growth Stock: Growth Stocks do not pay dividends, instead companies reinvest their profits into the company. Preferred: Earn dividends fixed at an annual rate.

Corporate Structure All corporations have the same basic structure. Stockholders elect a board of directors. 1 stock equals 1 vote. May elect selves. The board of directors is the governing body of the corporation. It makes business decisions and hires managers to run the corporation. Hires the CEO. 3/ asphttp:// 3/ asp

Board of Directors = Govern Management = Run Stockholders = Own Elect Appoint

Mergers (Acquisition) Buying of controlling shares of stock in one corporation by another corporation. Conglomerate Merger (non-related) Vertical Merger (closely-related) Horizontal Merger (same-market) Holding Company: owns or holds stock in other corporations.

Stock Exchanges NYSE: A stock exchange based in New York City, which is considered the largest equities-based exchange in the world based on total market capitalization of its listed securities. The parent company of the New York Stock Exchange is now called NYSE Euronext, following a merger with the European exchange in Represents 1/3 of world equities, 8,000 listings, holds 70 of the largest 100 Global Corporations. NYSE website

NASDAQ A computerized system that facilitates trading and provides price quotations on more than 5,000 of the more actively traded over the counter stocks. Created in 1971, the Nasdaq was the world's first electronic stock market. The term "Nasdaq" used to be capitalized "NASDAQ" as an acronym for National Association of Securities Dealers Automated Quotation. The acronym is no longer used and Nasdaq is now a proper noun. The Nasdaq is traditionally home to many high-tech stocks, such as Microsoft, Intel, Dell and Cisco.Nasdaq

American Stock Exchange AMEX is the third-largest stock exchange by trading volume in the United States. In 2008 it was acquired by the NYSE Euronext and became the NYSE Amex Equities in The AMEX is located in New York City and handles about 10% of all securities traded in the U.S.

World’s Largest Stock Exchanges glh/the-worlds-biggest-stock- exchanges/ glh/the-worlds-biggest-stock- exchanges/

Indexes Dow: DJIA video, Blue Chip StockDJIA video Standard & Poor’s, NASDAQ Composite

Reading Stock Quotes

How to trade stock? Stock Exchanges: – NYSE, AMEX, NASDAQ Stock Brokers are paid commission on trades Online:

Other Business Types (non-corporations) A sole proprietorship is basically an unincorporated (not a corporation) business owned and run by one individual (no partners are involved), As a sole proprietor, you are entitled to all profits and are responsible for all your business’s debts, losses and liabilities.sole proprietorship 70% of all U.S. businesses are Sole Proprietorships.

Partnerships A partnership is a single business where two or more people share ownership. See advantages and disadvantages:

Other Investments Futures Commodities Precious Metals Mutual Funds Hedge Funds

Resources Blue Chip Stock Increases Article Auto Industry Dow Jones Industrial Averages Standard and Poor's 500 NASDAQ Composite How Stocks are Bought and Sold 73,00.asphttp:// 73,00.asp

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